The extension of a key federal subsidy late last year has helped revive interest in developing new wind energy projects in North Dakota, based on documents filed with state regulators.

So far, five companies have filed letters of intent with the state’s Public Service Commission, outlining proposals to start construction this year on wind farms that would add 686 megawatts of wind power capacity, Commissioner Brian Kalk said last week.

That would be a 41 percent increase of the state’s wind energy capacity.

Although letters of intent are far from certain signs that projects will be completed, the five proposals would amount to about $1 billion worth of construction if they are completed, Kalk said.

The industry had gone into a slump of sorts because the law authorizing a production tax credit of 2.2 cents per kilowatt-hour of wind energy was set to expire at the end of 2012. The news did spur some construction because projects had to be completed before the law expired to qualify for the 10-year subsidy.

But early this year, it became clear Congress had sweetened the subsidy, increasing it to 2.3 cents and only requiring construction to begin in 2013; construction must be completed by the end of 2014 to qualify.

The tax credit adds up to a significant subsidy, bringing the operating cost of wind energy pretty close to that of coal-fired generation, which is the cheapest kind in the state.

Most of the cost of wind energy is in the construction and installation of the turbines. Once they are up, there is no “fuel” cost, like coal or gas plants have.

In North Dakota, the operating cost of wind-generated electricity is about 6 cents per kilowatt hour, roughly twice the operating cost of coal-generated electricity, said Jerry Lein, energy analyst at the PSC.

So the federal production tax credit of 2.3 cents per kilowatt-hour for wind farms brings the wholesale price of wind electricity down fairly close, perhaps within a penny or less at times, of the operating cost of coal-generated electricity, he said.

Worth of subsidy

Industry supporters say it’s worth it. According to the American Wind Energy Association, the main trade group, the federal tax credit’s cost last year of $1.8 billion helped spur wind-energy business of about $18 billion.

“The extension of the wind production tax credit has improved the prospects for wind to be developed,” Eric Norberg, president of Allete Clean Energy, said last week. “It’s still a very competitive market.”

His company, like Minnesota Power, is a subsidiary of Allete Inc., the biggest wind-energy producer in North Dakota.

Allete Clean Energy received a permit in August to build a 100-megawatt wind farm adjacent to Minnesota Power’s Bison 1, 2 and 3 projects northwest of Bismarck and the tax credit extension only helps, Norberg said.

Meanwhile, Minnesota Power in March filed a letter of intent with the PSC to build Bison 4, another wind farm northwest of Bismarck.

State and federal requirements for more clean energy are also boosting the wind industry.

Minnesota Power now gets 20 percent of its electricity from wind, well on target to meet Minnesota’s rule of 25 percent by 2025, said spokeswoman Amy Rutledge. And most of it comes from North Dakota.

Kevin Fee, spokesman for Minnkota Power Cooperative in Grand Forks, said the regional wholesaler of electricity has the capability of getting 30 percent of its power needs from wind.

Growing industry

The tax credit extension highlights how, only a decade since the first wind farm in North Dakota was built near Edgeley, the power generated is getting to be significant, said Jay Haley, an engineer and partner with EAPC, a consulting firm with offices in Argentina and Vermont as well as Grand Forks.

He helped design the state’s first wind farm and has consulted on dozens since then across the country, including several more in North Dakota.

Wind energy already makes up about 26 percent of the state’s total electrical power generating capacity of about 6,436 megawatts, according to figures from the U.S. Energy Information Administration and the latest figures from the PSC, Haley said. “That’s pretty impressive.”

Coal and wind together, in fact, account for 91 percent of the state’s total electrical energy capacity. The state’s coal-fired plants have about 4,200 megawatts of capacity, or two-thirds of the total electrical power capacity; wind is at 1,672 megawatts of capacity.

Hydroelectric capacity is 443 megawatts, or 6.9 percent of the total; oil-fired plants have a capacity of about 77 megawatts, natural gas plants about 10 megawatts and biomass plants about 10 megawatts.

Actual output

Of course, generating capacity is not the same as actual output, especially for wind farms.

Capacity is what a generator at peak capacity puts out in an instant. Actual output of electrical power typically is measured in kilowatt-hours or megawatt-hours. The “capacity factor” is the percentage of the generator’s “plated” capacity that it puts out over a given time.

Coal-fired plants produce electricity at a capacity factor of about twice that of North Dakota wind farms, Haley said. Coal plants put out about 85 percent of capacity while wind farms in the state now average 37 to 47 percent, he said.

But the capacity factor of wind turbines is improving steadily, and it’s not uncommon now to see the newer, bigger turbines putting out 50 percent of their plated capacity month in, month out, Haley said. Only a few years ago, the benchmark was about 35 percent or less, he said.

Power companies tend to keep their capacity factor figures confidential for competitive reasons.

But Minnkota Power, the wholesale producer and supplier of electricity to utilities in the region, publishes 11 years of records on two wind turbines, one near Petersburg, N.D., and one near Valley City, N.D. Together they have averaged 35 percent capacity factor, as low as 20 percent in the summer doldrums, as high as 50 percent in January’s Arctic breezes.

“Turbines have become larger and more efficient, and capacity factors are rising,” said Kevin Fee of Minnkota.

Amy Rutledge of Minnesota Power echoes that.

“We have had over 40 percent capacity factor on approximately 300 megawatts (of capacity) on our Bison 1, 2 and 3 projects that we have developed ourselves,” she said. “It’s been better than we expected.”

390,000 homes

The 991 wind turbines in service now in the state can be expected to produce 5.9 million megawatt-hours of electricity in a year, assuming they produce 40 percent of their plated capacity, a reasonable estimate, Haley said.

That would be enough to power about 390,000 average North Dakota homes, which each use about 15 megawatt-hours of energy a year, more than the national average because of the cold weather, Haley said.

Of course, many homes don’t get all their energy needs from electricity, but use natural gas or other fuel for heat. And of course, there aren’t that many homes in North Dakota: The U.S. Census figured there were 321,000 housing units in the state in 2011.

The five new proposed wind projects, if completed, could power completely, in theory, another 160,000 homes, or more as capacity factors improve.